George Kerevan: Labour needs a return to its roots

GEORGE KEREVAN

THE independence debate is resolving into a battle over who owns the soul of Scottish social democracy – SNP or Labour?

Both parties claim a passion for social justice, but Labour denies the SNP can be simultaneously nationalist and progressive.

Nationalists, on the other hand, see independence as the best guarantee of equality and an alternative to being shackled to a City-dominated Union in which the welfare state is being dismantled. Who is right?

At last weekend’s Scottish Labour conference, party leader Johann Lamont made her pitch: “Seven years of nationalism in Scotland and not one policy which distributes wealth from rich to poor – in fact, the opposite.”

Not one single policy, Johann? As regards wealth ownership, hasn’t the SNP government blocked the privatisation of the NHS in Scotland? In England, NHS contracting-out to companies owned by hedge funds is transferring public wealth wholesale into private hands.

As for income – which Lamont frequently confuses with wealth – in 2010 didn’t the SNP government introduced the so-called Living Wage for those workers under its direct control, and put pressure on local councils to follow suit?

The core of Labour’s attack is that the SNP government has maintained a commitment to universal benefits, claiming that free university tuition and free prescriptions are a middle class subsidy (no sympathy for her London counterpart Miliband’s “squeezed middle” from Lamont).

I’m of a generation of Scots whose parents and grandparents were scarred by the means test. To me, universal benefits are still the great benchmark of a common citizenship and civilised treatment of the less well-off.

It would be news to James Maxton, Gordon Brown’s political hero, that means testing is now a socialist virtue.

Where does Lamont’s re-definition of social democracy to embrace the means test lead? Not to more resources for the deserving. Witness: Ed Balls, the shadow chancellor, announced last week that Labour will not oppose Tory plans to set an overall cap on the level of welfare spending, including pensioner benefits. Which means the next Labour government is going to set a financial ceiling on welfare spending regardless of need. How progressive is that, Johann?

But Lamont’s most specious argument is the following: “We have a nationalist government which refuses to reverse Tory tax cuts for millionaires.”

Alex Salmond as a champion of Scotland’s oligarchs?

Let’s deconstruct that claim. Chancellor Osborne has cut the top rate of income tax (paid on earnings above £150,000) from 50p to 45p. Ed Balls says he will restore the 50p rate. Asked by the pro-Labour New Statesman magazine whether he would reintroduce the 50p tax rate, Alex Salmond replied: “We certainly are not going to put ourselves at a tax disadvantage with the rest of the UK”.

All Salmond is saying, of course, is that – assuming a predatory Conservative government in England – he will not be ambushed into setting Scottish income tax rates that play into George Osborne’s greedy hands. That’s hardly the same thing as saying he favours giving rich people tax handouts.

Canny Salmond has a long memory. At the 1999 Holyrood elections, he endorsed the “Penny for Scotland” policy that would have seen Scottish income tax higher than in the rest of the UK. Gordon Brown immediately attacked this move, saying: “Hardworking Scottish people would be punished to pay for the SNP’s obsession with divorcing Scotland from Britain.”

Here’s what Johann Lamont is not telling us: Scotland has very few high earners. There are only 13,000 Scots earning over the £150,000 top rate threshold. The Institute for Fiscal Studies points out that even if Holyrood raised the current 45 per cent rate on these incomes to, say, a hefty 60p in the pound, it would only bring in another £200 million. That’s a meagre £2.50 a month for every person in Scotland – which won’t do anything for serious income redistribution.

It is not just the super-rich who are scarce in Scotland. Only about 8.5 per cent of taxpayers north of the Border pay the 40p rate – compared with 14.7 per cent in the UK as a whole.

The point Lamont ignores is that Scotland needs to grow more taxpayers before we can relieve poverty effectively. And that demands independence in order to seize control of the policy levers that drive the economy. There are two kinds of social democrat: the Lamont ones who try and spend without having the cash to do so, and end up cutting benefits. And the Salmond kind who want to grow the economy in order to create the wealth for redistribution.

Finally, what about Lamont’s claim that the SNP puts nationalism above social justice? Think back to the 2010 general election when Gordon Brown had just lost his majority. It was the SNP who immediately offered Labour the chance of a rainbow alliance with the progressive parties – including the new Green MP and the nationalists in Scotland and Wales – in order to keep the Tories out of Downing Street. The SNP would have stayed out of a formal coalition but voted support from the backbenches.

Labour’s response? In the words of Douglas Alexander, a key member of Brown’s campaign team: “Personally, I can’t envisage circumstances in which we would enter into agreement with the Scottish National Party.”

Alexander preferred a Tory government rather than to seek SNP support for a progressive Labour administration. True, any such progressive alliance might still have been in a minority, but it would have protected people better than the subsequent capitulation to David Cameron and George Osborne. And the top rate of income tax would still be at 50p.

I don’t believe grassroots Scottish Labour has lost its progressive soul.

The sad thing is the Labour leadership has to denigrate the SNP’s palpable social democratic credentials for base reasons.

A Yes vote on 18 September guarantees a social democratic Scotland. At very best, a No vote gives you Ed Balls and his welfare cap. At worst, it’s goodbye welfare state. Choose.

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